View full sizeEverton Bailey Jr./The OregonianLake Oswego assistant city manager David Donaldson (center) explains to the City Council a proposed plan to increase utility franchise fees to round out a $2 million financial aid package to the Lake Oswego School District. The council later voted to approve the plan, 4-3.

LAKE OSWEGO -- The city council has endorsed a plan to temporarily increase private utility franchise fees in an effort to come up with a $2 million financial aid package to the Lake Oswego School District.

City officials voted 4-3 during a meeting on Tuesday to approve the fee hikes for one year with the intent of adding the revenue generated to a previously approved $1.2 million pledge. The aid is expected to help the school district combat a multimillion dollar budget shortfall next year.

Lake Oswego annually collects $2.4 million in franchise fees, Donaldson said, which includes $1 million from PGE (at a rate of 3.5 percent), $442,000 from Northwest Natural Gas (a 3 percent rate), $300,000 from Allied Waste (a 5 percent rate) and others. Between the increases to the three utility companies, residents will have to pay an additional $5 per month, he added.

Based on last year’s figures, the franchise fee increases would bring in an extra $807,000 a year. However, Donaldson also mentioned that only $365,000 would be raised by next March.

Councilors Mary Olson and Mike Kehoe said they were against the franchise fee increase and coming up with the rest of the $2 million in other ways.

“I’m not in favor of raising any new taxes on the citizens,” said Kehoe. “I prefer we find the money through cuts in the budget.”

Councilor Sally Moncrieff said she believes a three-year increase plan would give the city an opportunity to backfill its reserves.

“I think aiding our schools, one time with two million dollars, will make our reserve fund whole again,” she said. “I think this is a reasonable way to do it.”

Councilor Donna Jordan agreed, saying the additional time would also be a benefit for the council to discuss more in-depth the impacts of the fee increases.

“We have always said that we don’t have to run it through the full three years,” she said. “But I prefer to start out with those three years until we know what we’ve got. So if we want to come back a year from now and change the date or shorten the timeline that we can do that.”

But Councilor Jeff Gudman said the years could also be added on if the council chose to stick to the one year plan.

“I think it’s more important that we have the message that this is a one year program rather than part of it one year and part of it for three years,” he said.

Councilor Bill Tierney said he feels the council should make it very clear to the citizens that the increase in franchise fees will not be directed to the city as an additional revenue source.

“I think they should be discussed independently and the linkage is not appropriate, which is why I think it should be one year,” he said. “What the council did was say we will help the school district limiting it to one year, which means you collect 12 months worth of franchise fees and you pay 12 months worth of franchise fees. It’s the cleanest way of providing support for the schools.”